Question

You have on your schedule to receive street light products from your regular vendor in July 2020.On the 10th June 2020, you learnt from the news that the Vendor’s warehouse has been destroyed by fire and that they may not be able to recover in the next 12 months.

What type of Risk is this? Mention 4 possible things you will do?

Give 2 examples for each of the followings Risks that may apply to your project, 1Known unknown, 2 Unknown unknowns

Answer 1

As the vendor of the street light is not able to supply the streetlight due to fire in his warehouse, this type of risk is called external risk which is beyond the control of human. In some literature, the risk of the fire is also classified as a pure risk in which either there is no loss or full loss.

4 possible things to do=

The vendor is not able to supply the required item, the person should look for the other vendors who can supply the required number of the streetlight.

Try to contact the vendor to know if he can fulfill some of the demand or not.

Due to fire and interruption of the supply of the product, the person can renegotiate the contract with the supplier

One can ask the vendors to facilitate the information about possible other sources of the streetlight material at a relatively lower cost

Known Unknown risks are the risk that the organization has the understanding or knowledge but it is not sure about the extent of the risk.

Example= Natural disaster such as earthquake, hurricane and so on which are quite known to all but the extent of risk is not known

Example = The possibility of an accident such as breaking of fire

Unknown unknowns risks are the most dangerous risks as the organization does not have any indication about the existence of these risks.

Example= Extreme weather conditions that can cause the entire project to a standstill, for instance, extreme cold during the winter

Exaple= Spread of epidemics such as COVID19